CONTINUED GROWTH AND IMPROVED PROFITABILITY
During the first quarter net sales increased by 12% to SEK 23.6m (21.1). Adjusted for currency effects, organic growth was 20%. We saw continued improvement in profitability with
an adjusted operating margin for the quarter
of 7.6% (7.4). For the first time, we achieved a positive operating profit in the first quarter which historically has been low in net sales.
The operating cash flow also improved significantly from reduction of accounts receivables and higher operating profit. The growth primarily came from the bicycle and motorcycle categories, while the snow category started the year slower, driven by customers’ later production start-ups compared to last year.
Although the quarter developed somewhat weaker than we expected, there are a number of positive signs. We have experienced a significant increase in new helmet projects. Our major brands are increasing their model programs and implementation of MIPS BPS at all price points. We see increased interest from brands to have only MIPS solutions in their product range and furthermore constructive dialogues regarding new test standards by regulatory bodies. In addition, our patents have been tested in court with positive results.

OUR PATENTS STAND STRONG
During the spring three legal processes have been concluded with positive outcomes for MIPS. The first legal process relates to our opposition to Bauer Hockey, launched in 2015 regarding their European patent, which contained patent claims relating to protection against rotational motion. We have received a decision from EPO (European Patent Office) that Bauer’s patent is to be repealed in its entirety. The decision can be appealed by Bauer.
The second process concerns a legal dispute with the helmet manufacturer POC, where we have now agreed on the boundaries between our technologies. Our intent is to combine POC and MIPS strength in technical innovation, design and quality to develop helmets with rotational protection based on MIPS patented technology. We look forward to a more extensive collaboration with POC again.
Last but not least, the third process in Canada where we also received a positive judgment. The judgment confirms the novelty and inventiveness of patented MIPS Brain Protection System technology. In addition, the court ruled that some of Bauer’s patent rights are invalid since they were considered to be obvious variants of the previously developed MIPS technology.
Legal processes like these are extensive and costly to operate but incredibly important to protect a technology company like MIPS. Therefore, it is very satisfying to see that our patent portfolio holds for a formal legal review.
I am very pleased with the success of these disputes. The experience from these processes has given us an even better platform for our continued patent development.

HELMET USAGE AND DEMAND FOR SAFETY CONTINUE TO INCREASE
In an annual industry survey of helmet use in alpine skiing in the US, we see a continued increase among skiers now reaching 83%. At the launch of the first ski helmets with MIPS BPS in 2010, this figure was only 61%. We see an increased interest from brands and consumers.

CONTINUED CUSTOMER FOCUS AND TECHNICAL INNOVATION
Our focus on growing together with our customers, ensuring increased penetration in their model programs and developing our product portfolio continues. We see an increased awareness of the benefits of MIPS BPS by our end-users and increasing interest from new and existing customers. The MIPS-team has never been involved in as many projects with as many customers as today. With an expanding patent portfolio that protects our innovations, a fast-growing customer base that chooses MIPS BPS in a wider range of their model program, our scalable manufacturing model and continuous enhanced helmet usage, we are confidently looking forward to the journey towards our financial goals for 2020.

Johan Thiel
President and CEO

MIPS will present the Interim report at a teleconference on 9 May 2018 at 10.00 a.m. CET. To participate, please register at: http://emea.directeventreg.com/registration/9179329

MIPS is a world-leader in helmet-based safety and the protection of the human brain. Based on an ingredient brand business-model, MIPS Brain Protection System (BPS) is sold to the global helmet industry. The BPS solution, which is patented in all relevant markets, is based on 20 years of research and development together with the Royal Institute of Technology and the Karolinska Institute, both located in Stockholm, Sweden.

MIPS headquarter with 25 employees engaged in research and development, sales, marketing and administration is in Stockholm, where its product and technology test facility also is located. Production and manufacturing operations take place at sub-contractor facilities.

The MIPS share has been listed on Nasdaq Stockholm since March 2017. For more information, see www.mipscorp.com